European stocks' early momentum ran out of steam after most Asia-Pacific indexes closed higher Tuesday amid the increasing likelihood of an overhaul of the U.S. tax code.

The Stoxx Europe 600 was flat in early afternoon trading. S&P futures were up 0.1% in premarket trade.

U.S. retailers were on course for a positive open, with Under Armour Inc. looking to gain 1.8% and Gap Inc. heading for a 1.5% rise. Retailers are among the companies that tend to pay high effective tax rates, analysts say.

Those moves, as well as pockets of optimism across European and Asia-Pacific on Tuesday came in conjunction with the growing probability that Republican leaders will succeed in changing the U.S. tax code before the new year.

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House Republicans will vote Tuesday on the sweeping rewrite of the U.S. tax code, with the Senate expected to follow later Tuesday or Wednesday. The plan would cut the corporate rate to 21% next year from a top rate of 35% and lower the top individual tax rate by 2%.

While the House was expected to pass the bill by a comfortable margin, stocks had yet to price in the full expected impact of the legislative change, said Ben Laidler, global equities strategist at HSBC.

"There'll be some movement the more likely it becomes. The S&P's done well and that tells you it's not been priced in yet. The tax cuts could add 7% to large cap earnings, double that to small cap earnings... and tax reform should extend this earnings cycle," Mr. Laidler said.

With tax-cut proponents citing economic benefit as a motivation for the bill, "we don't think [the impact on GDP growth] will be massive... the main focus is the bill's impact on wages and inflation, but there is also the question of what impact it has on international trade," said Peter Schaffrik, head of European economics and interest rate strategy at RBC Capital Markets.

U.S. 10-year government bond yields edged up to 2.393% from 2.392% late Monday. Yields move inversely to prices.

That tax-driven momentum seemed to erode in early afternoon European trading though, amid a 0.3% uptick in the euro to $1.1811.

South African companies listed in Europe posted some of Europe's sharpest rises following the election of pro-business, anticorruption candidate Cyril Ramaphosa as leader of the country's ruling African National Congress on Monday. Mr. Ramaphosa is likely to win the presidency at national elections in 2019.

Steinhoff International Holdings was up 7.8%, and Old Mutual increased 4%, helped by the sale of an asset-management unit.

The South African Rand slid to $0.0783 overnight, but the currency remained 2.6% above Monday's open.

Semiconductor companies outperformed, despite a 0.2% fall for the Stoxx Europe 600 technology basket and weak tech trading in Asia-Pacific. Dialog Semiconductor was up 11% and AMS AG rose 4.5%. Dialog announced after markets closed on Monday that Chinese chip maker Tshinghua Unigroup had raised its stake to 9%.

Bitcoin was last down 6.3% at $17,772, according to CoinDesk, following an early-week fall amid the launch of CME futures trading.

Gregor Stuart Hunter contributed to this article.

Write to David Hodari at David.Hodari@dowjones.com

-- Dow industrials, S&P edge lower

-- Tech companies in S&P 500 fall 0.5%

-- Investors await crucial tax votes

Declining shares of technology companies caused stocks to wobble Tuesday morning ahead of House Republicans' vote on a sweeping rewrite of the U.S. tax code.

The Dow Jones Industrial Average fell 15 points, or less than 0.1%, to 24776 soon after the opening bell, while the S&P 500 also declined less than 0.1%. The Nasdaq Composite dropped 0.3%.

Shares of technology companies in the S&P 500 fell 0.5%, making the sector the broad index's biggest laggard.

While analysts say the tax bill is expected to boost profits among companies that pay relatively high effective tax rates, such as retailers, banks and other firms, tech companies aren't expected to benefit as much, analysts say, since they tend to pay a lower tax bill than other industries.

Tech companies in the S&P 500 pay an effective tax rate of about 18%, according to data from FactSet.

Those moves, as well as pockets of optimism among some European and Asia-Pacific investors on Tuesday, came in conjunction with the growing probability that Republican leaders will succeed in overhauling the U.S. tax code and slashing the corporate tax rate before the new year.

House Republicans are expected to pass the bill by a comfortable margin, with the Senate expected to vote later Tuesday or Wednesday.

"There'll be some movement the more likely it becomes. The S&P's done well and that tells you it's not been priced in yet. The tax cuts could add 7% to large cap earnings, double that to small cap earnings... and tax reform should extend this earnings cycle," said Ben Laidler, global equities strategist at HSBC.

European stocks' early momentum ran out of steam after most Asia-Pacific indexes closed higher Tuesday. The Stoxx Europe 600 was down 0.1% in recent trading.